After hearing legitimate complaints that his tax and spend Jobs plan was nothing more than class warfare, the President responded that it wasn’t about class warfare it was about math. In the end both sides are right, the President’s plan is about class warfare, and on top of that his math would get him an “F” in a 9th grade algebra class. The “F” would probably be accompanied by a note that says:
Let’s start with his everyone paying their fair share shtick. First of all there is not enough rich person income income to solve our massive debt problem over the short or long term. The top 3 percent of earners, those making $250,000 or more, have about $2.3 trillion in total annual income. So even if we took all their money it would only pay our bills for a bit over six months. it would only fund the government this year for just over six months. If you wanted to limit it a bit and only confiscate all the income of the 400 wealthiest Americans that would net only about $1.4 trillion, a pittance in the Obama budget. It would pay the federal government’s bills for about Four and a half months, which means neither the government nor those wealthy 400 would have anything left to buy guacamole dip for their Super Bowl Party (nor pay the electric so they can watch the game on TV).
The President also makes the argument that the rich pay a lower percentage of their income in taxes. Maybe he never looked at the numbers. According to an AP report, this year, households making more than $1 million will pay an average of 29.1 percent of their income in federal taxes, including income taxes and payroll taxes, according to the Tax Policy Center, a Washington think tank.
Households making between $50,000 and $75,000 will pay 15 percent of their income in federal taxes.
Lower-income households will pay less. For example, households making between $40,000 and $50,000 will pay an average of 12.5 percent of their income in federal taxes. Households making between $20,000 and $30,000 will pay 5.7 percent.
There are other reasons why a tax increase doesn’t make sense. In case the President didn’t notice the economic situation in the US is even worse than his math skills.Consider the fact that is the Small Businesses that create most of the growth necessary to get us out of this economic pickle (small businesses account for roughly two-thirds of net new jobs). Going after “the rich” means we are also going after those small businesses which pay taxes at the top individual rates (50 percent of small-business profits are taxed at the top two individual tax rates). Raising taxes on small businesses is like putting a brick wall in front of economic growth and job creation. Or to paraphrase what Obama said just a few months ago, it is a really dumb idea to raise taxes in the middle of an economic slow-down. As a possible reason for this presidential flip-flop maybe he tried all of his good ideas to help the economy and they didn’t work, so now he is trying the dumb ones. Sorry Mr. President, with all due respect, if it was a stupid idea before, it’s probably still a stupid idea.
Keep in mind all of his extra taxes in the Presidential Not Class Warfare Jobs bill will be increased even further in 2013 thanks to the Presidential Redistribution of Healthcare Legislation passed last year. In 2013, when economists tell us the unemployment rate will still be above 8.5% which is above the level the President said we would never reach if his Porkulus Act Designed To Recover Every Bad Progressive Idea was passed, the Administration’s tax policy would push the top effective tax rate to 44.8 percent from its current level of 35 percent. Not very conducive to recovery.
Here’s some more lousy math written on stationary containing the Presidential Seal. Based on Congressional Budget Office (CBO) projections based on what they think the most likely government policy, spending is on pace to double within a generation, and will make up 75% percent of the entire economy later this century (talk about overdrawing ones bank account).
The good news is that we won’t have to wait that long, the CBO also says the public debt overwhelm the entire economy within the decade (and if that happens we won’t be able to make fun of Al Gore when the global warming sky doesn’t fall). Economists have said that the massive debt not only threatens the next generation, but severely impairs economic growth and job creation today.
Some of what the President describes as spending cuts, are simple gimmicks such as the return of the war spending gimmick. The proposal claims over $1 trillion from a planned reduction in war spending, taking advantage of a budget convention that inflates costs that were explicitly meant to be temporary. By claiming these savings against a projection that was never realistic, the President doubles the apparent size of the spending cuts in this proposal. Its that old political rule, 2x imagination makes your budget look good. Its fine for politics but lousy math.
Then there is the good old, “looks like a cut but is really a tax increase” trick. Hidden in the President’s estimate of $257 billion of mandatory savings outside of health care are: $30 billion in higher taxes on the financial sector; $19 billion of savings from the off-budget Postal Service; and $7 billion of program integrity savings that CBO has determined do not save anywhere near the amounts claimed by the Administration. Once these gimmicks are stripped away, the President is proposing only $200 billion of savings from the over $5.6 trillion in mandatory spending planned over the next decade. Again it looks good politically but it is lousy math (and not very transparent).
Think about this for a second, the President’s jobs bill costs $447 billion dollars, it consists mostly of similar spending programs to the failed Porkulus Act Designed To Recover Every Bad Progressive Idea Bill. He wants to pay for it with new taxes in the midst of the slowest economic recovery in recent memory, or as I like to call it the second part of a double-dip recession. It reminds me of the guy who on payday took his paycheck and spent it at the local pub during lunch then went back to work and asked his boss for more money. Well we, the tax payers are the boss, and we need to stop giving our government more money until they stop blowing every paycheck at the local pub.
Here’s the easiest way to show that the jobs plan is not about everyone having their fair share, but simply about class warfare and redistribution of income. As described above, the President’s campaign meme about the rich paying a lower percentage of their income in taxes than the middle class is untrue. There are however examples of some rich people and corporations that do not pay their fair share of taxes. Warren Buffet says he is one of those with the low rates. GE run by presidential adviser Jeff Immelt is another they paid zero taxes.
If Barack Obama was simply trying to get everyone to pay their fair share, rather than increase the tax rate, he would propose real tax reform by lowering the overall tax rate combined with closing most tax loopholes and deductions. That kind of plan would ensure that everyone would be paying their fair share and would be revenue neutral.
But that is not the President’s objective, his Presidential Not Class Warfare Jobs Bill, just like his Porkulus Act Designed To Recover Every Bad Progressive Idea Bill and the Presidential Redistribution of Healthcare Legislation also known as Obamacare is all about what he told Joe The Plumber three years ago; redistribution of income.
To say anything else would make the President as lousy at truth as he is with math.